BSE Midcap index set for worst monthly fall in 18 months

The adage – Sell in May and go away – has proven correct this time around for stocks in the mid-cap segment with the S&P BSE Midcap index set to post its worst monthly fall in past 18 months. The performance comes on the back of sharp decline automobiles, pharmaceutical, capital goods and financial sector stocks.

The BSE Midcap index has declined 5.7 per cent thus far in May 2018. In comparison, the S&P BSE Small-cap index has lost 5.6 per cent, while the benchmark S&P BSE Sensex has slipped 0.6 per cent.

Earlier in November 2016, the midcap index had lost 7.2 per cent, while the small-cap index plunged 9.2 per cent after Narendra Modi – led government at the Centre unexpectedly pulled out high-denomination banknotes from circulation. The S&P BSE Sensex had slipped 4.6 per cent during November 2016.

“There has been a slight disappointment on the earnings front. The mutual funds, too, have been churning their holding. These two factors led to a sharp correction in the mid-cap stocks. One needs to be careful while investing in this segment. We expect price erosion in some stocks if the earnings do not catch up,” says Gaurang Shah, head investment strategist at Geojit Financial Services.